Statutory stock-register omission alone does not justify confiscation where goods are otherwise supported by packing slips and private records.

Omission to debit duty in the PLA/RG 23A account was held to attract penalty, but the reduced penalty was upheld because the lapse was limited and invoices had been issued. Confiscation was also set aside because the goods were packed, supported by valid packing slips, and reflected in private records as manufactured from recorded inputs; failure to make the final RG 1 entry did not by itself establish non-accountal warranting confiscation. The commentary states that such statutory stock-register omissions may still justify penal action, but not confiscation where the goods are otherwise accounted for in contemporaneous records.

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Issues: (i) Whether reduction of penalty imposed for non-debit of duty and non-accountal of goods called for interference. (ii) Whether confiscation of the goods was justified when the goods were packed and reflected in private records but not entered in the RG 1 register.

Issue (i): Whether reduction of penalty imposed for non-debit of duty and non-accountal of goods called for interference.

Analysis: The duty on the goods cleared under invoices had not been debited in the PLA/RG 23A account, and penalty under Rule 173Q(1) was therefore attracted. The quantum of penalty was treated as a matter of discretion, and the fact that invoices had been issued while debit was omitted was taken into account.

Conclusion: The reduction of penalty to Rs. 2,000/- was upheld and no interference was called for.

Issue (ii): Whether confiscation of the goods was justified when the goods were packed and reflected in private records but not entered in the RG 1 register.

Analysis: The failure was confined to the last stage of entry in the RG 1 register. The goods were found to have been duly packed, supported by valid packing slips, and accounted for in private records as manufactured out of recorded POY. Such omission in statutory record-keeping was treated as not amounting to non-accountal warranting confiscation, though it could attract penal action under Rule 226.

Conclusion: The setting aside of confiscation was upheld.

Final Conclusion: The Revenue's challenge failed, and the order under appeal was sustained in full, with both the reduced penalty and the deletion of confiscation remaining undisturbed.

Ratio Decidendi: Mere omission at the stage of statutory stock-register entry does not by itself establish non-accountal so as to justify confiscation where the goods are otherwise shown in private records and supported by packing documentation; penalty may still be imposed for the lapse.

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